The New York Times reports that the Federal Trade Commission has begun an inquiry into the close ties between the boards of directors at Apple and Google.
The reason for the inquiry stems from the Clayton Antitrust Act of 1914 which prohibits the participation on the board of two rival companies when it would reduce competition. Antitrust experts say the provision against “interlocking directorates,” known as Section 8 of the act, is rarely enforced. Nevertheless, the agency has already notified Google and Apple of its interest in the matter, according to the people briefed on the inquiry, who agreed to speak on condition of anonymity because the inquiry was confidential.
Apple and Google, of course, are becoming increasingly competitive with Apple’s move into web-services (MobileMe) and Google’s move into mobile phones (Android). Apple and Google also have rival web browsers (Safari vs. Chrome), photo software (iPhoto vs. Picasa) and video services (iTunes vs. YouTube). The potential conflict has not gone unnoticed and Schmidt has already been said to recuse himself from Apple board meetings when the topic of the iPhone is in discussion.
Even if a conflict is found, however, The New York Times reports that it rarely leads to any major repercussions, as executives may simply choose to resign from one board if it becomes an issue.